Australia’s new Prime Minister Tony Abbott has set a deadline of 12 months to put in place the crucial FTA with China [Getty Images]

China on Monday demanded an explanation from Australia after a report in an Australian newspaper said its embassies, including the one in Beijing, were being used as part of a US-led spying operation.

Chinese Foreign Ministry spokesman Hong Hei said diplomatic missions must “refrain from activities not in line with their duties”.

Beijing urged Australia to abide by the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations.

China and Australia had a consensus to increase cooperation, and both viewed the other as a development opportunity, the ministry spokesperson urged on Monday.

“China-Australia relations are facing an important opportunity, as China’s development has created vast opportunities for Australia,” said Hong.

Media reports alleged that Australia took part in a vast American surveillance network that spied on many countries in the Asia-Pacific, including China.

The Sydney Morning Herald reported last week that the intelligence collection takes place in Australian embassies across Asia, as well as other diplomatic missions, reportedly without the knowledge of Australian diplomats.

Beijing and Canberra are currently negotiating a free-trade agreement, nine rounds of free trade talks have already been held since 2005.

Australia’s new Prime Minister Tony Abbott has set a deadline of 12 months to put in place the crucial FTA with China.

China is the largest importer of Australian goods. Bilateral trade between the two countries stood at $122.3 billion in 2012.

57 founding members, many of them prominent US allies, will sign into creation the China-led Asian Infrastructure Investment Bank on Monday, the first major global financial instrument independent from the Bretton Woods system.

Representatives of the countries will meet in Beijing on Monday to sign an agreement of the bank, the Chinese Foreign Ministry said on Thursday. All the five BRICS countries are also joining the new infrastructure investment bank.

The agreement on the $100 billion AIIB will then have to be ratified by the parliaments of the founding members, Chinese Foreign Ministry spokesman Lu Kang said at a daily press briefing in Beijing.

The AIIB is also the first major multilateral development bank in a generation that provides an avenue for China to strengthen its presence in the world’s fastest-growing region.